ASA is pleased to present the annual commercial conversion factor survey for 2017. Each summer we anonymously survey anesthesiology practices across the country. We ask them to report up to five of their largest managed care (commercial) contracts conversion factors (CF) and the percentage each contract represents of their commercial population, along with some demographic information. Our objectives for the survey are to report to our members the average contractual amounts for the top five contracts and to present a view of regional trends in commercial contracting.

Summary

Based on the 2017 ASA commercial conversion factor survey results, the national average commercial conversion factor was $78.57, ranging between $70.87 and $83.38 for the five contracts. The national median was $72, ranging between $67 and $76.30 for the five contracts (Figure 1, Table 1). In the 2016 survey, the mean conversion factor ranged between $68.33 and $74.36, and the median ranged between $64 and $71. In contrast, the current national Medicare conversion factor for anesthesia services is $22.0454, or about 28.1 percent of the 2017 overall mean commercial conversion factor.

Figure 1 shows the frequency in percent and distribution of contract values. The estimated normal distribution is the solid blue line. Also, we are adding a box-and-whiskers plot of the same data immediately below the histogram. The left and right whiskers delineate the minimum and maximum values. The box represents the interquartile range, the left edge of the box is the 25th percentile, the vertical line in the box is the median, and the right edge of the box is the 75th percentile. The solid diamond in the box is the mean.

Table 1 provides the overall survey results by reported managed care contract. As with previous surveys, we requested that participants submit data on five commercial contracts. Most practices submitted three or more contracts. The survey reflects valid responses from 221 practices in 42 states, an increase from last year’s survey. The 2016 survey results included data from 204 practices in 41 states.

Methodology

The survey was disseminated in June 2017. To comply with the principles established by the Department of Justice (DOJ) and the Federal Trade Commission (FTC) in their 1996 Statements of Antitrust Enforcement Policy in Health Care, the survey requested from participants data that were at least three months old. In addition, the following three conditions must be met:

There are at least five providers reporting data upon which each disseminated statistic is based, and

No individual provider’s data represents more than 25 percent on a weighted basis of that statistic, and

Any information disseminated is sufficiently aggregated such that it would not allow recipients to identify the prices charged or compensation paid by any particular provider.

To comply with the statements, we are only able to provide aggregated data. Since some states did not respond, and other states had insufficient response rates, we are unable to provide specific data for all states. We term “Eligible States” those states that submitted sufficient data to be compliant with DOJ and FTC principles, and we provided state-specific data for only those states.

This is the seventh year that we offered the survey electronically through the website www.surveymonkey.com. ASA urged participation through various electronic mail offerings, including ASA committee listserves, ASAP (all-member weekly email newsletter), Vital Signs and via the ASA website.

The responses to the survey represented 224 unique practices. However, due to respondents providing incomplete data, we excluded three responses from the overall analysis. Our results are based on the data from 221 practices.

Results

Table 2 presents respondent information for 173 practices (48 practices did not provide us with practice demographics) in the analytic sample per Major Geographic Region as identified by the Medical Group Management Association (MGMA). These regions are as follows:

These 173 practices employ or contract with 5,027 full time equivalents (FTE) physician anesthesiologists, 5,379 FTE nurse anesthetists and 553 FTE anesthesiologist assistants (AAs). The practices also work with an additional 1,040 FTE nurse anesthetists and 38 FTE AAs for whom the practice does not directly pay compensation (i.e., facility hires or contracts the nurse anesthetist or AA).

The 221 practices reported a total of 919 managed care contracts. This is 13.6 percent more than the 809 contracts reported last year. Table 3 provides the same respondent information by Minor Geographic Region as identified by the MGMA. Again, 48 practices did not provide us with practice demographics.

Eight hundred eighty-three (883) of the contracts are based upon a 15-minute unit, nine upon a 12-minute unit, 19 are based upon a 10-minute unit and eight are based upon an eight-minute unit. We normalized all contract conversion factors with eight- 10- and 12-minute time units to the typical 15-minute time unit using an adjustment factor of 1.433 for eight-minute units, 1.248 for 10-minute units and 1.124 for 12-minute units (Table 4). Similar to the 2016 survey, the adjustment factors are calculated as ratios based on the mean time (86.3 minutes) and mean base units per case (5.86 base units). To make these calculations, we used the national medians published in the MGMA Cost Survey for Anesthesia and Pain Management Practices 2017 Data Dive Based on 2016 Data.

In addition, we confirmed the adjustments with the 2016 CMS Physician/Supplier Procedure Summary (PSPS) data set, which represents 11.3 million anesthesia claims. The mean time units were 77.2 minutes and mean base units per case were 5.14 units. Making the same calculation described above, the adjustment factors are nearly identical: 1.438 for eight-minute units, 1.25 for 10-minute units, and 1.125 for 12-minute units (Table 4).

More groups are reporting that payers have approached them for flat fee contracts for certain procedures. Table 5 (page 68) shows respondents who identified that they had flat fee contracts. 114 of the 221 groups (51.6 percent) responding to this question negotiated at least one flat fee contract. 44.8 percent of the respondents have flat fee contracts for labor and delivery.

Table 6 (page 69) reports the conversion factor by MGMA Major Region. Contract 1 reflected the highest percentage of the reported commercial business, Contract 2 reflected the second highest percentage, and so on. Thus, when looking at the data, you can see that Contract 1 not only reflects the greatest number of responses (221) but also the highest average percentage of managed care business (19.0 percent, Table 1). We also reported the total number of responses for each contract in Table 1. Figure 2 shows the contract data for each region as a box-and-whiskers plot.

This is the third year we are presenting state-specific data for those eligible states (Figure 4, page 70, Table 8, page 71) whose reporting complied with the DOJ and FTC require-ments, listed above. Sixteen states provided us sufficient information to comply with requirements. We are hoping that by providing this data, we can encourage more participation in the 2018 CF study.

Based on our review of the analysis, the most interesting findings include:

┊ The national average conversion factor increased from a range of $68.33-$74.36 in 2016 to a range of $70.87-$83.38 in 2017.

┊ Conversion factors across the country are similar, with the Eastern Region still having the highest mean of $80.93. The Southern Region was very close with a mean of $80.49.

┊ Every region and nearly every contract category had a reported conversion factor high of at least $112.07. The highest conversion factor reported was $280. In 2016, these figures were $97 and $182 respectively.

Conclusions

This year’s survey represents a similar sample size to the 2016 ASA CF Survey. Respondents reported on a broad geographic basis, allowing us to provide detailed regional responses. More states reported a sufficient number of practices and contracts to allow us to do state reporting. Some practices did not include complete demographic information, and we are hopeful that they will complete all information in future surveys.

We will continue to monitor the trend in the commercial conversion factor survey results and will launch the survey again in June 2018. It is important that as many practices as possible participate in the 2018 survey to help us obtain an accurate representation of the anesthesia commercial conversion factor. We hope that a significant growth in reporting by state will allow us to publish additional state data. We look forward to your future participation and thank all of the practices that contributed to the 2017 results.